In Part I, I presented readers with the premise that the next rally for the precious metals sector would be triggered by either some significant “event” or (worse) a full-fledged market crash. Indeed, I suggested to readers that with gold and silver seemingly “trapped” (by the banksters) in a trading range that the sector needed a catalyst of this nature to break the metals free from this manipulation inertia.
I then went on to outline one of those scenarios: the crash-driven rally. Precious metals prices (and most commodities) would suddenly begin spiraling higher in an exponential manner – a clear signal that the masses would be beginning to shun the worthless paper of the banksters (and an obvious prelude to hyperinflation). To halt that existential threat to the bankers’ paper empire they would do precisely what they did in 2008: crash global markets to temporarily put the brakes on commodity prices, and buy them a reprieve from the total collapse of their paper.
Those who enjoy semantics will argue that I’m not describing a “crash-driven rally”, but rather a rally, a crash, and then another rally. However, with the insane volatility which has been permanently imposed on our markets through the banksters’ Pied Piper trading algorithms, an “exponential” move in commodity prices can occur over a period of a few, short weeks.
Not being a short-term oriented “trader” (i.e. a gambler), I simply don’t acknowledge moves of a couple of weeks (in either direction) as being either a rally or a correction. With the price of gold now capable of rising or falling by 5% in a single day (and the price of silver capable of moving at double that speed), even violent moves of a couple weeks duration no longer qualify as “rallies” or “corrections” in any statistical sense. The ‘beta’ in this sector has widened to such an extreme that such violent short-term moves now can only be (properly) classified under the broader heading of volatility.
Thus we would have extreme volatility to the upside, followed by even more extreme, even more brief volatility on the downside – leading to the sector’s next true rally. That is the extreme scenario looking ahead. As I noted in Part I, the only desirable aspect to this scenario is that we would essentially have advance warning of what was to come when (if) we see precious metals and commodity prices begin soaring “for no reason”.
In contrast, the other trigger for the next precious metals rally could also be a less-extreme, less-harmful event. However the downside to this more benign scenario is that we would (likely) not have the advance warning we would get in the crash scenario. Two recent examples of such “event-driven” rallies come to mind: one of these events was instigated by the bankers, the other forced upon them.
In the former category, we have the ridiculously over-hyped scheme by the banksters to crush the market by dumping 400 tons of IMF gold, much as the Bank of England had done a decade earlier – when it flooded the market with half the nation’s gold reserves, costing UK citizens billions of pounds. While this event occurred in the middle of 2009, the entire plot (principally a propaganda campaign) stretched out over a year and a half.
In labeling this scheme as being ridiculous, we start with the fact that the bankers had their stooges in the mainstream media announce and re-announce this “sale” of IMF gold on at least a half-dozen separate occasions – before the legal authority to sell a single ounce of that gold had ever been granted. The analogy would be to announce (and re-announce) the “sale” of a house again and again the moment that a bid had been accepted, but before the purchaser had even approached a bank to apply for a mortgage.
This was the proverbial “Shock and Awe” operation which the banksters love so much. Frighten the market as much as possible in advance, by “warning” people of the pending sale again and again and again – and then splash all of that gold onto the market all at once to (hopefully) induce a stampede of selling.
That was the plan. But as with most of what the banksters attempt, it didn’t work out quite as they had schemed. Instead of the sound of a “splash” as all that gold hit the market, there was the sound of a “gulp” (and then a burp) as the government of India swallowed-up half of the IMF’s gold in a single purchase!
This extremely bullish development (a total surprise to people on both sides of the market) caused an immediate bounce higher in gold and silver prices. Horrified, the bankers ordered their stooges at the IMF to immediately pull the rest of the gold off the market. This was despite the fact that the price was rising and the IMF had (apparently) been extremely eager to sell their gold, and despite the fact that large buyers (such as Canada’s Eric Sprott) were standing their – cheques in hand – ready to pay those rising prices. In other words, there could be no possible legitimate reason for the IMF to have withheld that gold from those eager buyers.
What the less sophisticated buyers saw was simply that demand for gold (and silver) greatly exceeds supply: the ultimate bullish signal for any sector. What the more sophisticated investors in this sector saw was the bankers turning and running. The damage was done.
Another recent example of an event-driven rally for the precious metals sector involved the opposite dynamics. Rather than being a controlled, bankster plot (which had simply blown up in their face), this other recent event was a reaction to circumstances – and thus more similar in nature to the crash-driven scenario.
Specifically, in 2010 with the U.S. propaganda machine having extreme difficulty convincing the sheep that the U.S.’s Greater Depression was actually an “economic recovery”, the U.S. government was needed to be seen as doing something (so that the propaganda machine would have some ammunition to use in its brainwashing and market-pumping). The problem was that having just exhausted approximately $1 trillion in “stimulus” that there wasn’t a penny to be had from the normally pliable-and-obedient U.S. Congress. Thus (by default) “doing something” was foisted upon the paper-printers at the Federal Reserve.
The Federal Reserve obliged, and ordered the printing of another $600+ billion in greenbacks. The Fed did this despite the fact that there was not the slightest indication of a “tight” money supply. In other words it was supplying something (more liquidity) for which there was no demand. In economics, this is known by the colloquialism of “pushing on a string”.
The Fed also did this despite the fact that the entire world was already awash with banker-paper, and most of the world’s other governments urged the Fed not to engage in what was clearly a reckless and futile (and highly inflationary) policy. It did this despite the fact that most of the (normally totally servile) economics community openly warned that even in the best-case scenario that more extravagant U.S. money-printing could have little positive impact.
Again precious metals investors saw two “pictures” here. The less-sophisticated simply latched on to the obvious inflationary implications of flooding the world with yet more (worthless) paper. The more-sophisticated saw the bankers flooding the world with more paper – despite the fact that little good could come of it (even from an optimistic viewpoint).
Not only did the policy reek of desperation, but it sent an even clearer signal to this portion of the market: our governments are entirely out of “tools” to deal with this self-induced, economic death-spiral to which they have committed us all. The only tactic left to them is to simply deal with every problem by printing more money.
That realization was the largest driver in pushing gold and silver prices steadily higher right through to the spring of 2011. Indeed, the obvious question is why has there been any interruption at all in the continuing rise of precious metals prices? In fact, since QE II it has been confirmed that our governments lack any tools or tactics other than just more reckless money-printing.
What did we see in Greece? Print-and-loan, print-and-loan, print-and-loan – despite the fact that there was absolutely zero improvement in the Greek economy throughout these two years of futility. And when the bankers and the Greek government became unable to dupe the rest of Europe into authorizing even more money-printing (and debt) it immediately defaulted on 75% of its debt.
I continue to tell readers and investors that precious metals buyers do not need a crystal ball to know what is going to happen with our economies, and (by inevitable consequence) with the price of precious metals: print-and-loan, print-and-loan, print-and-loan…and then default. And as we see these debt-dominoes defaulting one by one, we will see precious metals prices doing precisely what they always do in the 1,000 years that these paper currencies (and the worthless “bonds” behind them) have been plummeting to zero: their prices will rise toward infinity.
“Those who cannot remember the past are condemned to repeat it.”
– George Santayana (1863 – 1952)
It’s really very simple. Those who have read the history books are holding gold and silver today. Those who have not read the history books (i.e. the Chumps) are trustingly holding the bankers paper – in what is literally the world’s oldest scam. And as has been happening for 1,000 years; when the Chumps wake up one morning and discover that their “money” is now toilet paper they will be “surprised”.
No one understands the real value of this paper better than the bankers of Switzerland – theLand of Bankers. It seems that in recent months the Swiss have been sucking approximately 15 tons of gold per month, out of Italy alone. Naturally they are paying for that gold with their banker paper, and we can only speculate on how many tons of gold the Swiss are eagerly siphoning out of its other European neighbours – as those nations drown on the debts created by these same (Swiss) bankers.
In 2009, the world’s central banks flip-flopped from being huge sellers to net-buyers of gold, for the first time in several decades. When the creators of this gigantic paper-scam start swapping their own paper for gold, that should be enough of a warning sign even for the Chumps. If the words of Santayana, a thousand years of empirical evidence, and the bankers own obvious paper-trail is not enough to prevent the Chumps from again falling victim to the bankers’ paper scams then presumably nothing can save them.
Related Tickers: SPDR Gold Trust (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), iShares Silver Trust (NYSEARCA:IAU), ProShares Ultra Silver (NYSEARCA:AGQ), ProShares UltraShort Silver (NYSEARCA:ZSL), Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ), Goldcorp Inc. (NYSE:GG), Barrick Gold Corporation (NYSE:ABX).
Jeff Nielson is from Canada and is a writer/editor for Bullion Bulls Canada www.bullionbullscanada.com. He has a personal background in law and economics. Bullion Bulls Canada provides general macro-economic and political commentary, since the precious metals markets are among the most complex (and misunderstood) in the world.
Bullion Bulls Canada also provides basic coverage of Canadian precious metals mining companies. Canada is the global leader in mining exploration, and Canadian-listed mining companies (on the Toronto Stock Exchange and Venture Exchange) are responsible for the majority of the world’s most-promising discoveries.